Ottawa has unveiled its vision for Canada’s grain transportation system and so far farm groups seem happy about it.
But it doesn’t mean Ottawa can wipe grain transportation from its list of policy issues just yet.
Transport Minister Marc Garneau outlined his Transport 2030 plan in a speech in Montreal Nov. 3. It was a lengthy address that was all about trains, planes and automobiles.
The goal, he said, is to get Canadians and their goods to where they need to go in an efficient manner while benefiting the national economy.
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The overarching speech touched on everything from airport security wait times to airline ownership, rail safety and infrastructure improvements.
For the many farm groups present, key lines about how Ottawa plans to deal with the country’s grain transportation woes caught their attention.
The federal government, Garneau said, plans to introduce legislation next spring that will allow producers and shippers to negotiate reciprocal penalties in rail contracts, something shippers and farm groups have been demanding for years.
Reciprocal penalties in contracts was a key request put forward to the former Conservative government at the height of the grain transportation crisis in 2013-14.
Shippers argued that the railways were allowed to impose penalty clauses on shippers if they failed to deliver on their contracts, but similar penalties are not allowed on railways.
The request for reciprocal penalties had also been put to the government before millions of tonnes of grain was left stranded across the Prairies for months, costing the western Canadian economy about $5 billion. The request had been repeatedly refused by the Conservatives.
Garneau told reporters Nov. 3 the decision to allow reciprocal penalties was based on ensuring a more equitable shipping environment, adding Ottawa will work to clarify in its spring legislation what “adequate and suitable” service means.
Canada’s grain transportation system has been a dominant policy concern among western farm groups for years, with producers and shippers worried the system’s susceptibility to backlog was putting Canada’s global reputation as a reliable shipper at risk.
Demands for a long-term, sustainable solution were constant, with farmers regularly raising the matter with MPs in Ottawa and in their home ridings.
But, while many farm groups welcomed Ottawa’s latest promises, some took a cautionary tone. Western agriculture ministers warned that the devil will be in the details — especially since the transport minister has not said how he plans to deal with two other controversial issues on the same file: the maximum revenue entitlement (MRE) on what railways can charge to ship grain and extended interswitching, which allows one railway limited access to a competing railway’s track.
Garneau has said decisions on those will be made by next spring and presented at the same time as the pending legislation on reciprocal penalties.
The 2015 Emerson report recommended the MRE be phased out within seven years. The recommendation was welcomed by Canada’s major railways, which insist the policy stifles innovation. Farm groups argue the rule protects farmers from being overcharged for grain shipping because of lack of rail competition.
Emerson also advised Ottawa to end a 2014 decision to extend interswitching distances — a move Canadian National Railway and Canadian Pacific Railway argue has complicated grain movement. Farm groups say the practice has increased competition.
Garneau would not say whether he agrees with Emerson’s recommendations.
Parliament extended the Fair Rail for Grain Farmers Act in June for the 2016-17 crop year. The year-long extension was granted to give Garneau time to develop his plan for remaking Canada’s grain logistics system.
